Why Sirius XM (SIRI) Is a

NEW YORK (TheStreet) -- TheStreet Ratings Team has reiterated its "buy" rating for Sirius XM (SIRI) with a ratings score of B, making recent weakness a possible buying opportunity.

Shares of the satellite radio provider fell 1.2% Friday, closing at $3.64. Sirius XM gained 1.1% over the past six months, and added 20.4% over the past year. Shares hit a 52-week high of $4.13 on Oct. 22, 2013. More than 60 million shares of the company were traded on Friday, just below the average daily trading volume of 67.2 million.

SIRI Chart SIRI data by YCharts

TheStreet Ratings team rates SIRIUS XM HOLDINGS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate SIRIUS XM HOLDINGS INC (SIRI) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 2.3%. Since the same quarter one year prior, revenues rose by 10.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • Net operating cash flow has increased to $302.24 million or 37.49% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 15.27%.
  • The gross profit margin for SIRIUS XM HOLDINGS INC is rather high; currently it is at 65.01%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 6.54% trails the industry average.
  • SIRIUS XM HOLDINGS INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SIRIUS XM HOLDINGS INC increased its bottom line by earning $0.53 versus $0.07 in the prior year. For the next year, the market is expecting a contraction of 86.8% in earnings ($0.07 versus $0.53).
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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